Public sector lender IDBI Bank on Thursday sought bids to sell 13.71% stake in SIDBI.
Public sector lender IDBI Bank on Thursday sought bids to sell 13.71% stake in Small Industries Development Bank of India (SIDBI). According to a source, the bank has already identified a buyer for the remaining 2.54% its owns in SIDBI. Last month, the lender had mandated SBI Capital Markets (SBI Caps) to look for a buyer for its entire stake of 16.25% but had to extend the bid submission deadline in more than one occasion owing to tepid investor response. “Although we have identified a buyer for the 2.54% stake, a few formalities are yet to be completed and we hope to sell the remaining stake in the latest round,” a banker said.
IDBI Bank is the second-largest shareholder in SIDBI after State Bank of India (SBI) which owns 16.73%. Other shareholders include the government of India (15.4%), Life Insurance Corporation (12.21%), Punjab National Bank (3.99%) and other public sector banks and insurance companies. The advertisement announcing the stake sale said that investors require to submit a demand draft of Rs 29,500 in favour of the bank by September 14.
The sale is part of IDBI Bank’s plan to raise capital by divesting non-core assets. Mahesh Kumar Jain, managing director and chief executive officer, IDBI Bank had said in June that it would sell Rs 5,000 crore of non-core assets in FY18 to bolster its capital base. The bank had formed a committee to work around right valuations. The bank has, so far, received `1,861-crore capital infusion from the government in FY18.
Meanwhile, in May, the Reserve Bank of India (RBI) had initiated a prompt corrective action (PCA) for IDBI Bank. The action was prompted by IDBI Bank’s high net non-performing assets (NPAs) and negative return on assets (RoA). In Q1FY18, the bank’s net NPA ratio stood at 15.8% while the RoA stood at -1%.